Germany to press for tax cooperation, debt transparency at IMF/G20 meetings

BERLIN (Reuters) - German Finance Minister Olaf Scholz will urge financial leaders next week to strive for a minimum level of corporate taxation globally and increase debt transparency in developing countries, a senior German government official said on Friday.

FILE PHOTO: Finance Minister Olaf Scholz addresses a news conference to present the budget plans for 2019 and the upcoming years in Berlin, Germany March 20, 2019. REUTERS/Fabrizio Bensch

The talks in Washington will be dominated by political risks such as trade disputes and Britain’s departure from the European Union, said the government official who spoke on condition of anonymity.

Scholz, who is likely to face calls to increase fiscal stimulus to counter the effect of a slowing economy, will tell allies that Germany’s large current account surplus will shrink gradually due to vibrant domestic demand, rising real wages and increased state spending, the official added.

“This won’t happen rapidly, this will happen step by step,” the official said.

Germany expects its current account surplus, by far the largest in the world, to shrink to the equivalent of 6.8 percent of its economic output next year from 7.3 percent this year.

Finance ministers and central bank governors of the world’s 20 biggest economies are due to meet in Washington next week with the state of the global economy and political risks to growth at the top of the agenda.

In a preview of the April 12-14 IMF and World Bank Spring Meetings, International Monetary Fund Managing Director Christine Lagarde said on Tuesday that global growth has lost momentum amid rising trade tensions and tighter financial conditions.

Scholz sees a minimum level of corporate taxation globally as an important step to prevent digital companies such as Google, Facebook and Amazon from booking profits in low-tax countries rather than where their customers are located.

The government official said that the talks in Washington should bring progress on this front and that Scholz hoped for an agreement among the members of the Organization for Economic Cooperation and Development (OECD) by mid-2020.

Scholz is also expected to urge China and other countries to share more information about their lending in other countries to increase debt transparency.

China has become one of the largest lenders in emerging markets, but it is not a member of the Paris Club of government creditors.

Reporting by Michael Nienaber; editing by Thomas Seythal and Alexander Ratz